PACRA Maintains the Entity Ratings of VMS Trading Company

VMS Trading Company (“VMS” or “the Company”) operates in Pakistan’s rice processing and trading sector, with a notable presence in the rice export market. The Company has an integrated production setup, managing the procurement of raw rice to processing and delivery of finished products. While IRRI-6 rice is the primary revenue driver, VMS also processes and trades in IRRI-9. The Company caters to a diverse customer base, offering varying specifications related to rice whitening, mixing proportions, polishing levels, and other requirements. Rice is one of the major staple foods (second after wheat) as well as cash crops in Pakistan. Punjab accounts for ~52% of Pakistan’s rice production, while Sindh contributes about 38%, and the remaining 8% from Balochistan. Pakistan ranks 10th in global rice production, with output evenly split between Basmati and coarse varieties. After absorbing the impact of floods in FY23, rice production surged ~35.6% YoY to ~9.9 million MT in FY24, supported by favorable monsoon rains and a ~20% increase in cultivated area. Additionally, Pakistan capitalized on India’s temporary export ban on rice products, nearly doubling its rice exports in both volume and value to ~USD 3.9 billion (~6.0 million MT). This strong performance was further supported by robust demand from key markets such as Indonesia and Africa. Encouragingly, the momentum from FY24 has carried into 10MFY25, with rice exports already reaching ~6.0 million MT—a ~20% increase over the full-year FY24 volume. However, concerns loom for FY26, as export volumes are projected to face challenges due to a decline in cultivated area in Sindh, only partially offset by growth in Punjab, compounded by intensified competition following India’s lifting of its export ban and minimum price restrictions. VMS’s ~74% of revenue derived from exports and ~26% from the local market. During 9MFY25, the Company recorded sales of ~PKR 8,560mln, reflecting a YoY growth of ~22% compared to FY24 ~PKR 9,339mln mainly due to increase in volumes and price inflation, however margins faced slight dilution due to increases in freight, utility and administration cost. VMS is a sole proprietorship and requires notable improvements in legal and governance structure, furthermore, external auditors are only QCR-rated. Going forward, VMS is envisaged to materialize the strategies through (a) tapping new export markets (b) better pricing models (c) effective working capital management. The Company’s financial risk profile is characterized by comfortable coverages, cashflows, and working capital cycle. The Company's capital structure is leveraged, with borrowings primarily composed of short-term at concessionary rates to manage working capital.
The ratings are dependent on the rationalization of the management’s strategies to gain a position in the global market under a challenging business environment. With the upcoming growth in the firm’s business & volumes; prudent financial discipline and implementation of a stringent control environment shall remain imperative.

About the Entity
VMS Trading Company is a sole proprietorship established in 2010. The Business is engaged in the processing and trading of rice. The Company has a processing capacity of 193,200MT of rice per annum. The Company has two manufacturing facilities located in S.I.T.E and Port Qasim, Karachi. The Business’s ownership resides with the CEO, Mr. Kheem Chand. He is assisted by a team of professionals.